IN The Business of Global Food Security

The Agco Future Farm and training centre is part of the company’s three-year $100m investment plan in Africa. Agco, the US farm equipment manufacturer, best known for its bright red Massey Ferguson tractors, will be investing in developing distribution, infrastructure and training sites in collaboration with partner companies of the World Economic Forum.

The project is one of an escalating number of partnerships stemming from the WEF’s New Vision for Agriculture initiative. Multinational agriculture groups, including Syngenta, Monsanto and Cargill, in partnership with governments, international organisations and farmers’ organisations aim to develop sustainable methods and improve farming practices for Africa’s 80m smallholders.

For the companies involved, the benefits are obvious – better yields mean richer farmers and more customers for their products.

For the rest of the world, higher yields mean more food for a global population expected to peak at about 10bn mid-century, from 7bn today.

Hence a growing emphasis on more efficient production techniques, including so-called precision agriculture that applies advanced GPS, data analytics and remote sensing to farming. Monsanto, the US genetically modified seeds group, spent $930m last year buying Climate Corporation, a San Francisco-based data company.

A new sense of urgency, however, has been injected into the debate by the UN’s Intergovernmental Panel on Climate Change. Its latest report, published in March, found global warming was already having a detrimental effect on food security.

“Climate change has negatively affected wheat and maize yields for many regions and in the global aggregate,” it said. “Based on many studies covering a wide range of regions and crops, negative impacts of climate change on crop yields have been more common than positive impacts.”

The question is not only how we grow more, but also how we make changes to distribution that reduce waste

- Justin Sherrard, Rabobank

A link between global warming and rising prices of the two staples was presented in the report – a conclusion that supports fears of higher food prices in the future.

Net global crop yields could decline by up to 2 per cent a decade from the 2030s, it estimated, while food demand will increase by 14 per cent.

The climate body described a Sisyphean task of producing more food, pointing out that a reason for concern was the “risk of food insecurity and breakdown of food systems linked to warming, drought, flooding and precipitation variability and extremes, particularly for poorer populations”.

If the report helps to accelerate addressing food security concerns, it will have made a big contribution.

Food security appears intractable because it requires co-ordination across many agencies and the sharing of costs between governments, non-governmental organisations and the private sector, as well as the establishment of incentives to encourage good practice.

Movements such as Scaling Up Nutrition, a collective action group that brings the UN, governments, businesses, scientists and donors together, are a step in the right direction. But they could go further.

“This needs to translate into effective co-ordination at country level by establishing within each government, a co-ordinating unit to scale up essential nutrition interventions,” says Ulrich Villis, a director of the Boston Consulting Group’s social impact team.

On the issue of so-called “land grabs”, for example, he sees scope for the development of what he terms “smart regulations” by governments – for example lending out the use of land in combination with schemes to share technical and local farming knowledge between local populations and independent organisations.

“National governments are often torn in two – on the one hand, selling the right to grow crops is a source of income, but the negative effect is that, potentially, land is taken out that could have been directed towards the needs of the local population,” says Mr Villis.

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Though food security tends to focus on efficient agricultural production, the crucial role played by supply chains is being recognised says Justin Sherrard, global strategist at Rabobank, the Netherlands-based lender that provides financing to farmers.

“The question is not only how we grow more, but also how we make changes to the distribution of food that reduces waste and makes cost savings,” he says.

He notes a trend towards greater co-operation across the supply chain, especially in the dairy industry. In Turkey, for example, Sütaş, the dairy processing company says it aims to “meticulously control every stage of production – from grass to table”.

The company has invested in a feed factory and technology for dairy farmers to boost milk production and help mitigate the disruption caused by volatile feed prices.

The fact that more than 800m people go hungry every day shines the spotlight on problems other than inefficient production – including waste, weak supply chains and lack of education. This is because many experts believe that, for the moment at least, enough food is produced for everyone.

Yet almost one-third of all food produced is wasted. In emerging markets, this is usually the result of poor production processes, transport and storage, while in rich countries it is often the result of a throwaway mentality.

Mr Villis cites the example of the 3m children under the age of five who die in developing countries every year because of malnutrition. This is almost the equivalent of the similarly-aged child population in the UK or Germany – and five times the number of under five-year olds dying from malaria. The majority of undernourished people are in Asia, especially India, and sub-Saharan Africa.

Hygiene is one problem; another is that in some parts of Africa, fewer than 20 per cent of mothers breastfeed their babies exclusively, suggesting the need for more education and support.

Education is also needed in richer countries, believes Mr Sherrard, to teach people to value food more and, in so doing, take more interest in food security through measures such as urban farming schemes and growing food on rooftops or in schools.

“When people don’t know where food comes from, they don’t think about it,” he says. “To improve food security, people need to stop thinking of it as an entitlement and recognise that it will be a challenge to feed people on the planet.”

Thailand’s contentious rice subsidy scheme has cost the government billions of dollars, won it the votes of the farming heartland – and could now lead to the downfall of Yingluck Shinawatra, prime minister, writes Michael Peel.

Ms Yingluck will be suspended from office if – as many expect – the country’s anti-corruption commission refers her for possible impeachment by the senate over her alleged failure to stop massive losses from the price support programme.

The investigation into Ms Yingluck, who denies wrongdoing in her role as head of the policy-making National Rice Committee, is closely linked to Thailand’s bruising power struggle.

While the corruption commission says it is an independent investigative body, the premier’s supporters and some outside observers say its actions appear to be part of a broader campaign by the establishment elite-backed opposition to oust her.

Whatever the outcome of the legal case, the rice scheme has been widely criticised as an ill-conceived programme that has led to the build-up of massive stockpiles and has cost Thailand its position as the world’s number one rice exporter.

Ms Yingluck launched the scheme shortly after her election in July 2011. It has cost more than $10bn a year since and has run into ever deeper losses, as the gap has grown between the price per tonne the government was paying to farmers and an international price that fell 23 per cent in 2013.

Total losses will be hard to gauge until the authorities offload mounting stores, which, it is estimated, will reach almost 15m tonnes this year.

By February this year, the government was trying to sell warehoused rice to settle a near-$4bn debt owed to growers, some of whom had started to protest they were being short-changed.

The Yingluck administration has struggled to raise funds from bonds and bank loans to support the rice policy. This has been heavily criticised by the International Monetary Fund, but is passionately defended by ministers as a main plank of efforts to benefit rural Thais.

The rice-growing heartlands in the country’s north and centre have delivered millions of votes to Thaksin Shinawatra, a self-exiled former prime minister and Ms Yingluck’s brother, and his allies in a string of elections dating back to 2001.

Ms Yingluck pleaded on April 8 for fair treatment by the corruption commission, adding that her legal team would ask for permission to call four additional witnesses in the rice case.

But most observers see her position as precarious, in an affair that has highlighted how basic foodstuffs and the subsidies they spawn remain at the core of political controversy.